Since year 2014, the Silicon Valley company’s shares had been 3x more valuable than today. However, the company itself wasn’t prudent enough due to lack of proper leadership, unimpressive growing leverage alongside sustaining stronger profit range.
In contrary to above, investing is an unpredictable procedure: stock that might seem suitable to market watchers today can be turned down in rating the very next.
Likewise Netflix Inc. proved that to Wall Street with disappointing subscriber metrics (despite being one of the top performers in S&P 500 Index a year prior);depicting a sell-off preference by declining its stock worth 16% since January.
Similarly, Twitter’s stock seems vulnerable in this case. Is the rebound since February’s latest low-water mark just another head-fake for a troubled company doomed for continuous declines?
The following might aid investors when they skim through Twitter’s first Q report (26 April 2016).
Twitter had been reporting a flat user growth in Q – since December 2015 – in comparison to a Q prior alongside U.S user base shrinkage. Twitter posted less than 10% user growth over annual scale- and the comparisons are only going to get tough; holding flat at 320 million total users will add up to less than 6% growth since a tally of 302 million in the first Q of last year.
To overcome this, social giant had been introducing a more contextual form of Twitter feeds through Twitter Moments. Furthermore it had been bringing in GIF search in February to target youngsters in abundance. With its business battle with Snapchat and Facebook Inc. Twitter had been streamlining private messages – a way to ease connectivity between users.
Keeping the scenario in discourse, a query could be well deduced to whether the quarterly report depicts an incremented number of users or not? It could not be believed in this completely, however. Not to mention, preceding innovations might bring something good in social giant’s fate.
UPDATE: Twitter is valued at around four times 2016 sales, a pittance compared with other tech plays like Big Data darling Splunk Inc. – which trades for around 8x projected 2016 revenue-, or cybersecurity stock Palo Alto Networks– which trades for more than nine times sales.
Twitter’s stock has a favorable trend: In the 4Q, revenue was up massively yet again, boosting fiscal 2015 sales to $2.2 billion – a 58% jump from a year earlier, a feat that’s even more impressive by its lack of user growth.
Investors are encouraged by this fact, and for good reason. But revenue isn’t the whole story. Cost of revenue heaved 63% in fiscal 2015.
Much of that had been managed by Jack Dorsey’s return – no doubt he had shaken up the executive team where analyst look onto to expect a continued change amid innovations this year.
If Twitter reports poor user metrics again, investors are going to have to simply take these positives on faith, and that will be difficult given past performance (source: Market Watch).